This week I have the privilege to spend some time in the San Francisco Bay area with a group of agriculture technology entrepreneurs from several Eastern European countries. It’s part of my side activities in helping build and nurture entrepreneurship communities in the part of the world where I spend most of my time.
As we go to meetings with successful local companies and talk to experienced business developers, executives, investors, and lawyers, I can’t help but marvel at the general state of excellence in Silicon Valley. It is amazing how much value has been created, and continues to thrive, in such a small, and frankly quite remote part of the world.
Having spent most of my life in hotspots of academic and business excellence (Russia, Netherlands, Germany, New England), every time I’m in Northern California I try to conceptualize and better understand how exactly this place has gained so much momentum, becoming the birthplace of so many great innovations. Yes, I understand the initial head start given in the 1950s by US government defense and space race spending. I also understand how Stanford and Berkeley where quick to offer platforms for scientists (first) and entrepreneurs (later on) to meet and work together.
But looking at the world as a whole, there are many other places where similar amounts of money and effort are being spent on building technology and business communities. Germany is still the leader in engineering, France and Netherlands are strong in life sciences, London in England is the world’s finance hub, and Korea and Japan are undisputed electronics giants.
And yet, no one has been able to get close to the kind of inclusive innovation system that is Silicon Valley.
This time I have the benefit of additional perspective. I spent part of my childhood in the US where my dad worked for US government space research, and hanging around research labs and university campuses is second nature to me. It is the first time though for me to witness so closely how ambitious foreign entrepreneurs, with years of experience, see the Bay area ecosystem for the first time with their own eyes.
Many books have been written about this, and time and again we try to analyze what makes “Silicon Valley tick”. Looking through the history of some of the greatest successes, both companies and investment funds, you usually see one big factor apart from very hard work: being in the right place at the right time.
Some call it luck, but then luck famously, like inspiration, can only come when it finds you working hard. Many believe that privilege plays a big role too, and it’s true. It’s much harder to get access to the right communities if you’re not born into them. But in the end of the day, it’s all about having or getting access. Being able to find the limited amount of people that can help grow a business, with skills and/or goal-oriented, affordable, accessible capital.
And this is where Silicon Valley is fundamentally different from other communities. The combination of very advanced capitalist and meritocratic incentives, combined with a culture of multicultural openness, create a playground where smart, ambitious people can get the opportunity to work on things they couldn’t do elsewhere. Because of closed systems, or lack of money. Frankly, I believe both capital and skills are abundant in Europe and Asia too, but cultural factors prevent them from being shared as openly as in Silicon Valley.
Some of my friends have said it, and it’s one of my favorite metaphors for describing the effort required by foreign entrepreneurs in the Valley: you need to be as good as the locals and better, because of all the extra hurdles like immigration and language barriers.
That’s why I believe the scarcest resource for entrepreneurs is access. To capital, skills, and experiential insights that can only be learned by doing, or internalized by hiring. And it’s hard everywhere; in Silicon Valley one needs to outrun a million or so other entrepreneurs chasing the same resources. Outside the Valley, competition is less, but access is also more limited due to cultural barriers and closed business networks.
Creating systems of access is what business services should all be about, whether it’s law firms, marketing agencies, or capital providers.
And entrepreneurship, I came to appreciate even more this week, is about building a usable path to those resources. With capital, traction, validation, and network as currency that can help an entrepreneur get access to the most scarce of resources before others.
Posted By Max Gurvits, Director CEE/CIS/MENA at CBA.